Jury awards damages to city of SLO

A jury found that the city of San Luis Obispo wasn’t responsible for a breach of contract alleged in a lawsuit by an engineering company hired eight years ago to improve the city’s water reclamation facility.

The city was awarded $224,000 in damages by the jury in San Luis Obispo Superior Court after an almost 11-week trial heard by Judge Charles S. Crandall.

Pacific Mechanical Corp., based in Concord, filed the lawsuit seeking $4.8 million from the city.

“We are disappointed with the verdict and considering our options,” said attorney Jeffery Speich, who represented the company. “At this time we have made no decision.”

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The lawsuit stemmed from a construction contract the city had with the engineering firm in 2003 to build a portion of the city’s water-recycling facility.

The work was not completed as planned, according to the city, and took 597 days longer than it was supposed to.

The city paid Pacific Mechanical Corporation $4.8 million for the work done but withheld $1.2 million because of the delays, said City Attorney Christine Dietrick.

Pacific Mechanical Corp. sued the city in federal district court in Los Angeles in 2008, saying the city violated the due process for handling the contract. That case was later dismissed.

The company then filed the lawsuit alleging a breach of contract in San Luis Obispo Superior Court.

Dietrick said the city will seek additional money from the company to pay for additional costs and attorney fees accumulated during the trial — totaling about $500,000.

The $224,000 already awarded to the city by the jury’s decision only covers costs related to the project, Dietrick said.

The city is a member of the California Joint Powers Insurance Authority — a statewide insurance pool used by cities — but it does not cover breach-of-contract cases, Dietrick said. She said an appeal is under way to recover some of those costs.

The costs of the trial will come from the city’s utilities fund if no additional funds are awarded, she said.

Reach AnnMarie Cornejo at 781-7939. Stay updated by following @a_cornejo on Twitter.